Frac Sand Producer US Silica Forecasts Strong Second Half

July 31 (Reuters) - U.S. Silica Holdings Inc's, which makes sand used in hydraulic fracturing, forecast an upbeat second half of the year on strong demand for locally sourced sand, helping its shares recover after disappointing quarterly results.

Permian producers are increasingly using locally available sand for fracking to save transport costs. U.S. silica said it signed four new local sand delivery contracts in the second quarter.

Chief Executive Officer Bryan Shinn said on a post-earnings conference call that he expects 15-16 percent of all Permian sand demand to be met locally by mid-2019.

"The trend towards longer laterals and more sand per well is continuing and will drive strong demand into 2019 and beyond." Shinn said.

The company's shares, which were down as much as 4.3 percent on results, were up 1 percent at $27.24.

The U.S. shale revolution, centered around the Permian basin, has driven oil and gas producers to dig deeper for oil. Latest designs involve longer lateral wells that are kept open by the use of proppants like sand.

Shinn said he does not see oil and gas producers from the Oklahoma, Arkansas and Mississippi basins buying frac sand from the regional and in-basin sand producers yet.

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